Progress on the real Living Wage takes a step back - KPMG United Kingdom
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Progress on the real Living Wage takes a regrettable step back

Progress on the real Living Wage takes a step back

KPMG analysis reveals that over a fifth (22%) of UK jobs currently pay below the real Living Wage*, which represents an increase of 1.2 million jobs since 2012.

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  • Over a fifth (22%) of UK jobs currently pay below the real Living Wage (up from 21% last year)
  • Part-time workers are three times more likely to be paid below the threshold of £8.75 (or £10.20 in London)
  • Nearly seven in ten (68%) workers aged 18 – 21 earned less than the real Living Wage, with the prevalence also increasing among those aged 60+ 
  • Nearly 60% more women face in-work poverty compared to men, with those aged 50 – 59 especially at risk 
  • Northern Ireland and East Midlands have the highest proportion of jobs paying below the threshold (26%), whilst the South East has the least (18%).

Undoing the progress made last year, over a fifth (22%) of UK jobs currently pay below the real Living Wage*, which represents an increase of 1.2 million jobs since 2012, KPMG analysis reveals.

Last year’s report saw the number of jobs paying below the Living Wage slightly down on the preceding year, hinting at some progress. However, the latest analysis conducted by IHS Markit for KPMG finds that the proportion of jobs paying less than the Living Wage now stands at 22% (up from 21% in 2017).

A closer look at the findings reveals that part-time workers are more than three times as likely to be paid below the Living Wage, with 43% below the threshold compared to only 13% of full-time workers.

The analysis also reveals that nearly seven in ten workers aged between 18 and 21 earned below the threshold, compared to the lowest proportion of only 15% among those aged 40 – 49. The prevalence of in-work poverty increased again once approaching retirement age, with a quarter (25%) of those 60+ facing in-work poverty.

At the same time, there continues to be regional disparity across the UK, with Northern Ireland and the East Midlands having the highest proportion of jobs paying below the Living Wage, at 26% in each. By contrast, the South East has the lowest proportion, at only 18%. The real Living Wage rate nationally currently stands at £8.75, whilst in London it is £10.20.

Looking to gender equality, the proportion of female employees earning less than the real Living Wage (27%) continues to exceed that for males (17%). This means that nearly 60% more women were paid below the real Living Wage, compared to men. Furthermore, in every age category, the proportion of females earning less than the threshold exceeded the percentage of males, with the greatest gap noted among those 50 – 59 years of age.

Commenting on the findings, Jenny Baskerville, director of social equality at KPMG UK, said:

“The latest real Living Wage analysis makes for very dire reading on all counts. While some progress was made last year, it’s clear that it has retreated and left more facing in-work poverty as a result, especially if you’re a part-time worker, under the age of 21 or over 60, female, living outside the South East, or any combination of these. In fact, the number of jobs paying below the real Living Wage has actually increased by 1.2million since 2012, hammering home the magnitude of this problem.

“It’s critical that we reward and value those making a contribution to our society and economy, and clearly such a sizeable challenge requires a collective approach. For businesses though, it’s vital to look beyond the bottom line, and instead focus on non-monetary aspects that the real Living Wage can bring, like improved staff morale, rising service standards or increased productivity.”

                                                        - ENDS -
* What is the real Living Wage?
The real Living Wage is an hourly rate of pay set independently and updated annually (not the UK government’s national living wage). It is calculated according to the basic cost of living in the UK, and employers choose to pay the Living Wage on a voluntary basis.

For media enquiries, please contact:
Simon Wilson, KPMG Corporate Communications
T: 020 7 311 6651
M: 077853 73397
E: simon.wilson@kpmg.co.uk
KPMG Press Office: +44 (0)207 694 8773

Notes to Editors:

About the research:
KPMG commissioned IHS Markit to conduct the seventh annual update of its data analysis on the Living Wage. The IHS Markit methodology is based on analysis derived from the Annual Survey of Hours and Earnings (ASHE) conducted by the Office of National Statistics (ONS). The survey provides a detailed breakdown of hourly earnings, allowing for granular analysis, and where possible intersections, across occupations, both full and part-time, and key demographics such as region, gender and age. Results are published on both a national and UK regional basis.  

Historical overview of UK voluntary Living Wage estimates (all employee jobs)

Year

Number earning below voluntary Living Wage (millions)* Percentage of jobs below voluntary Living Wage* Real UK Living Wage (£) Real London Living Wage (£)
2012 4.54 19% 7.2 8.3
2013 4.87 20% 7.45
8.55
2014 5.33 21% 7.65 8.8
2015 5.6 22% 7.85
9.15
2016 5.62 22% 8.25 9.4
2017 5.55 21% 8.45 9.75
2018 5.75 22% 8.75 10.2

* IHS Markit estimates, rounded. Estimates for number of jobs derived from ASHE 2018.

Regional overview of proportion of employees earning less than the real Living Wage in 2018:

 

 Region    Proportion of those earning below the voluntary Living Wage (%) 
 Northern Ireland 26
 East Midlands 26
 Wales 25
 North East 24
 Yorkshire & Humber 24
 North West 23
 West Midlands 23
 South West 22
 East 22
 London 20
 Scotland 19
 South East 18
   
 UK 22

Gender analysis, the proportion of employees earning less than the real Living Wage in 2018:

 Gender   Proportion of those earning below the voluntary Living Wage (%) 
 Male 17
 Female 27

Age overview of proportion of employees earning less than the real Living Wage in 2018:

 Age Range   Proportion of those earning below the voluntary Living Wage (%) 
 18 - 21 68
 22 - 29 25
 30 - 39 16
 40 - 49 15
 50 - 59 17
 60+ 25

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff.  The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and territories and has 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About the Living Wage Foundation

Only the real Living Wage is calculated according to the basic cost of living in the UK and in London. Employers choose to pay this wage on a voluntary basis. The real Living Wage applies to all workers over 18 – in recognition that young people face the same living costs as everyone else. It enjoys cross party support.

The UK Living Wage for outside of London is currently £8.75 per hour. The London Living Wage is currently £10.20 per hour. This figure covers all boroughs in Greater London. These figures are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence on living standards in UK and in London. 

The Living Wage Foundation is the institution at the heart of the independent movement of businesses, organisations and people who believe that a fair day’s work deserves a fair day’s pay. We recognise and celebrate the leadership shown by the over 4,500 Living Wage employers across the UK who voluntarily commit to ensure their staff earn a real Living Wage that meets the cost of living. We are an initiative of Citizens UK.

About IHS Markit IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

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